New Analysis Warns UK Internet Service Providers at Risk from Brexit

New research from financial analyst firm Plimsoll Publishing has claimed that Internet Service Providers (ISP) are one of the top 10 UK industries identified as being “under threat” and “most at risk” from Brexit, particularly a “No Deal” Brexit outcome.

The findings were produced using the latest data from Companies House, with Plimsoll then examining the financial health of those companies using information from their previous 4 years of accounts. The research claims to highlight those industries that could lose out if access to the EU’s signal market is restricted, not least by considering their existing financial health and reliance on EU linked exports or connectivity.

Topping the list is the Luxury Goods sector with 39% of companies flagged as being “in danger” and 33% already operating at a loss. New Media companies, Oil & Gas, Subsea Engineering, Biotechnology and Marine Contractors, also make the list. Many of those are heavily reliant on exports to the EU and thus the negative impact from a potential increase in related tariffs.

Interestingly Internet Service Providers (ISP) have also been included into the top 10. Overall 227 ISPs were examined in the latest analysis and 79 were found to be “in danger“, with Plimsoll claiming that around 90% of previously failed ISP companies were given the same Danger rating 2 years prior to their demise.

Christopher Evans, Senior Analyst at Plimsoll, said: “The chances of the UK leaving the EU without a trade deal appears to have increased significantly of late. While some openly welcome such an outcome, for many industries it will make a tough job even harder. Many UK sectors rely on the frictionless trade and common regulations that being in the EU affords them, however, this could all change on Friday 29th March 2019.”

However we’d take this particular report with a pinch of salt because frustratingly the public version does not clarify precisely why ISPs are so at risk (you have to pay through the nose to get that detail). Furthermore it also fails to clarify whether they’re talking about ISPs in terms of internet content / products (Netflix, Web Hosting etc.) or internet access / broadband providers (different sides of the same coin) or both together. We did ask and had no reply.

On the other hand there are areas which we know could be impacted, such as the loss of EU funding for broadband projects, higher mobile roaming charges and the pros or cons of being disconnected from EU state aid rules. Some providers, such as BT, also get a big chunk of their revenue from outside the UK. Sadly all of this remains uncertain until we know what, if any, final Brexit deal has actually been done.

Earlier this year the Government’s Environment Secretary, Michael Gove MP, told a meeting of UK farmers that fast broadband and 4G mobile coverage remains “patchy and poor in many areas” and that true universal coverage could be “paid for by the money we no longer have to give to the EU” (here). Sadly we’ve yet to see any solid figures being stated to support this claim (wasn’t it all supposed to go to the NHS?).

Arguably a much more useful report was published last year by the Broadband Stakeholders Group think-tank, which did a fair job of summarising the risks and challenges of Brexit for digital communications across the United Kingdom (here). The Carnegie UK Trust has similarly published a paper that highlights some of the potential risks and opportunities that Brexit could bring for digital consumers (here).